WHEREAS, it has become necessary to enrich the legal framework that imposed a Value Added Tax on the consumption of goods and services other than capital, with an objective of encouraging saving and investment; taking into consideration the changes that have been made in economic activities particularly electronic transactions and new thoughts accepted by the International community, to enable the tax system contribute to the economic development of the Nation;

 WHEREAS, it has become necessary to  reformulate the Proclamation by incorporating basic rules and moving detailed provisions to the Regulations and Directives to give it a structure that can easily be understandable as well as to make it clear and easy for reference;

WHEREAS, it is believed that the tax exemption shall be centered to the section of the population to which it was targeted and the law shall ensure fairness and that the benefit goes to the public and the business community by maintaining the chain between input tax and output tax;

NOW, THEREFORE, in accordance with  the power granted by the Second term and Second joint decisions of the House of Federations and House of People’s Representatives which held on 11 April 2002 on the basis of Article 99 and Article 55 Sub Article (1) of the Constitution, it is hereby proclaimed as follows: